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Early estimates of the impact of the COVID-19 pandemic on GDP: a case study of Saudi Arabia

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  • David Havrlant
  • Abdulelah Darandary
  • Abdelrahman Muhsen

Abstract

The COVID-19 pandemic has affected economic sectors in a very heterogeneous way. In the early stages of the economic lockdown, only limited economic data, if any, related to the event were available. With the government’s discretionary measures to contain the infection, it became obvious that some sectors will suffer more than others. We have used this information within the input-output framework to calibrate demand shocks to individual sectors and to obtain early estimates of the impact on sectoral and overall GDP. Given the high level of uncertainty, we designed three scenarios, reflecting the severity of the shock, its sectoral distribution, and the time needed for recovery, and applied to the Saudi economy. The negative impact on headline GDP in 2020 is estimated to range from −4.8% to −9.8% compared to the baseline level, while the government’s fiscal countermeasures result in a positive effect of some 2.5% in real GDP. The study also shows how to accommodate a qualitative shift in economic conditions given the still-evolving pandemic. We consider the potential situation of a second wave of the infection that would enforce a protracted lockdown and imply second-round effects.

Suggested Citation

  • David Havrlant & Abdulelah Darandary & Abdelrahman Muhsen, 2021. "Early estimates of the impact of the COVID-19 pandemic on GDP: a case study of Saudi Arabia," Applied Economics, Taylor & Francis Journals, vol. 53(12), pages 1317-1325, March.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:12:p:1317-1325
    DOI: 10.1080/00036846.2020.1828809
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    Cited by:

    1. Nguyen, Viet Cuong, 2023. "Does the Covid-19 Pandemic Make People Unhappy? Evidence from a Six-Country Survey," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 64(1), pages 18-41, June.
    2. Bonfiglio, Andrea & Coderoni, Silvia & Esposti, Roberto, 2022. "Policy responses to COVID-19 pandemic waves: Cross-region and cross-sector economic impact," Journal of Policy Modeling, Elsevier, vol. 44(2), pages 252-279.
    3. Hanns de la Fuente-Mella & Rolando Rubilar & Karime Chahuán-Jiménez & Víctor Leiva, 2021. "Modeling COVID-19 Cases Statistically and Evaluating Their Effect on the Economy of Countries," Mathematics, MDPI, vol. 9(13), pages 1-13, July.
    4. Muntazir Hussain & Usman Bashir & Ramiz Ur Rehman, 2024. "Exchange Rate and Stock Prices Volatility Connectedness and Spillover during Pandemic Induced-Crises: Evidence from BRICS Countries," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 31(1), pages 183-203, March.
    5. Du, Xinming & Tan, Elaine & Elhan-Kayalar, Yesim & Sawada, Yasuyuki, 2022. "Economic Impact of COVID-19 Containment Policies: Evidence Based on Novel Surface Heat Data from the People’s Republic of China," ADB Economics Working Paper Series 673, Asian Development Bank.
    6. Ratchaphong Klinsrisuk & Watchara Pechdin, 2022. "Evidence from Thailand on Easing COVID-19’s International Travel Restrictions: An Impact on Economic Production, Household Income, and Sustainable Tourism Development," Sustainability, MDPI, vol. 14(6), pages 1-13, March.
    7. Andrej Privara, 2022. "Economic growth and labour market in the European Union: lessons from COVID-19," Oeconomia Copernicana, Institute of Economic Research, vol. 13(2), pages 355-377, June.
    8. Devi Prasad Dash & Narayan Sethi, 2022. "Pandemics, Lockdown And Economic Growth: A Region-Specific Perspective On Covid-19," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(Special I), pages 43-60, March.

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